An Detailed Guide on How to Invest in Cryptocurrency
With all of the hype and news regarding cryptocurrencies, you are probably interested in trying out your luck with this wonderful new technology. The problem is that most guides out there are lacking or simply too intimidating!
We’ll you’re in luck because we have an in-depth guide on how to invest in cryptocurrency as well as detailed steps to help you get started on trading. So take a seat because this is going to be a long session.
What is The Cryptocurrency Market?
The cryptocurrency market is simply the market for cryptocurrencies. To validate transactions, cryptocurrency transactions are validated through a digital payment mechanism that is not dependent on banks. Payments are made and received via peer-to-peer technology that allows anybody, anywhere to send and receive money.
Rather than in the physical world, cryptocurrency payments are made through an online database where all transactions are documented and monitored, as with traditional bank transfers. All transactions involving your crypto funds are recorded in a public ledger.
Cryptocurrency money is stored in digital wallets. This is because it uses encryption to verify transactions, hence the name “cryptocurrency.” Additionally, when bitcoin data is being stored or sent, additional coding is required. Cryptography, which is the process of encrypting data, is primarily concerned with the security and safety of cryptocurrency.
What is its Potential?
Bitcoins and other cryptocurrencies are not issued or backed by a central authority, such as a government, as are traditional currencies. They instead make use of a computer network to accomplish their goals. Cryptocurrencies, on the other hand, can be acquired and exchanged on exchanges, as well as saved in ‘wallets.’
In contrast to traditional fiat money, a cryptocurrency’s blockchain is the only physical record of the cryptocurrency’s ownership.
Rather than transferring the crypto straight to the recipient, one sends it to the recipient’s digital wallet first, which allows the recipient to access the cryptocurrency. A transaction must be validated and uploaded to the blockchain to be declared final. This is accomplished through mining. This is also the method via which tokens are generated.
Governments are Noticing its Potential
According to a report by marketandmarkets.com, opportunities for growth in the cryptocurrency industry can be found in rising markets such as India, China, and Brazil, as well as more developed countries such as the United States and Germany.
Earlier this year, Brazilian crypto businesses signed a code of self-regulation to legitimize and encourage the usage of cryptocurrency assets in the country. The signing of the deal was overseen by Abcripto, the country’s association of cryptocurrency companies, which was present.
With this agreement, all parties engaged will be required to follow uniform operational methods and comply with uniform compliance criteria. The code has been signed by several well-known bitcoin companies in the country, including Foxbit, Ripio, Bitcoin Market, and Novadax, among others to name a few.
Despite its potential, governments all over the world are still making their move to legitimize cryptocurrencies. As more governments incorporate cryptocurrencies into their system, the bigger the cryptocurrency market grows. You can learn more about these details from our previous article right here (insert a link to crypto winter article).
Reduced Cost of Ownership
According to a report released by MarketWatch, transactions using cryptocurrency are based on the blockchain and cryptography concepts. Because of cryptocurrency’s low transaction fees and its ability to move funds quickly and securely, it is a good alternative for online transactions.
As a result of these factors, it is anticipated that global market growth will accelerate. There is also an assumption that the cryptocurrency sector will continue to develop in the coming years, with only minor increases in the rate of exchange, interest rates, or other fees related to international transactions.
Large Market Capitalization
Only a handful of companies in the stock market have a market capitalization equivalent to the total cryptocurrency market (Apple, Amazon, and Google). The potential of the cryptocurrency sector is enormous when the regulatory framework is in place.
When compared to other financial markets, the trader or holder of Cryptocurrency can make a substantial profit. Good examples of this would be the case of Star Atlas, Solana, and many more fast-growing crypto projects.
The only thing that’s holding investors back from going all-in is that the crypto market is generally risky. The market is volatile and you can easily lose the majority of your investments if you aren’t careful.
An A to Z Guide for Beginners
If you’re new to the cryptomarket, then we’ve prepared a step-by-step guide to getting you started. It will cover everything you need to know starting from buying and trading cryptocurrencies to securing your wallet.
How to Buy & Trade Cryptocurrency
Cryptocurrencies can be purchased and sold through a service or an exchange, but it is strongly recommended that you use additional secure storage measures.
You will need a cryptocurrency exchange account, personal identification documents, a secure internet connection, and a payment method.
Choose A Cryptocurrency Exchange
If you become a member of a cryptocurrency exchange, you will be able to purchase, sell, and store digital currencies. Unlike traditional exchanges, cryptocurrency exchanges are available in several shapes and sizes.
These exchanges are usually decentralized, which means they do not have a single point of authority over all of their transactions. Because of the decentralization and individual sovereignty of cryptocurrencies, several exchanges require customers to remain anonymous and do not need them to input any personal information when using their services.
When setting up a bitcoin exchange account, it is vital to use safe Internet practices to avoid being scammed. One of the most important components of this strategy is the use of two-factor authentication, as well as a lengthy, unique password that contains a combination of lowercase and capital letters, special characters, as well as numerals.
Exchanges We Recommend
Binance is a cryptocurrency exchange that offers hundreds of coins, making it one of the largest cryptocurrency exchanges on the internet. If we’re talking about cryptocurrency, Binance is one of the most well-known marketplaces on the planet.
- Support more than 500 coins
- Earn Passive Income
- Convenient trading Tools
- Issues with some countries
- Can be complex for some people
Coinbase is one of the most prominent exchanges for buying, selling, and trading bitcoin, and it has been around since 2009. As with any other exchange, Bitcoin can be purchased through an online stockbroker. However, while using Coinbase, beware of the high fees and poor customer support that are associated with the business.
- Easy to use
- Over 100 cryptocurrencies
- Lacks support for some altcoins
- Can be expensive
FTX, one of the world’s largest cryptocurrency exchanges, offers inexpensive fees as well as a large range of cryptocurrencies. The FTX.US platform, which caters to customers in the United States, is limited in terms of cryptocurrency possibilities, but it does provide several valuable services.
- Low fees
- NFT Marketplace
- Features advanced trading tools
- A smaller selection of cryptocurrencies
- Lack of live support options
KuCoin is a well-known brand in the cryptocurrency industry, and it has grown into a famous one-stop shop for all types of cryptocurrency transactions. With over 200 cryptocurrencies and over 400 markets, the exchange has developed significantly since its launch in August 2017, making it one of the most active cryptocurrency exchanges on the internet.
- Nearly 600 cryptocurrencies
- Features crypto lending
- Has margin trading
- Trading limitations
- Not beginner-friendly
Connect To A Payment Service
Once you’ve reached a trade agreement, assemble your documents. Certain purchases may necessitate the submission of digital photographs of your driver’s license or Social Security card, as well as information about your employer and financial resources, among other things.
Following the verification of your identity, the exchange will ask for your payment method. Most exchanges accept connections made with a debit or credit card, as well as with a bank account, for the most part.
The use of a credit card to purchase bitcoin is conceivable; however, it is not recommended owing to volatility in the cryptocurrency market, which may raise the overall cost of acquisition.
It is crucial to understand the fees connected with each payment option to make the most informed decision about which exchange or payment method is most convenient for you.
You should check with your financial institution to ensure that the exchange you’ve chosen accepts deposits. Deposits made using a bank account, a debit card, or a credit card are subject to a different set of fees.
Store Your Crypto In A Wallet
Keeping your cryptocurrencies in a private wallet ensures that only you have access to the private key that unlocks your assets. Keeping your funds separate from an exchange also reduces the likelihood that your exchange would be hacked, resulting in the loss of all of your funds, which is a potential risk.
There are two main types of wallets: Cold Wallets and Hot Wallets
In the cryptocurrency world, an offline cold wallet, also known as a hardware wallet, is a device that holds your cryptocurrency in an offline storage place, such as a computer’s hard drive. In many cases, they take on the appearance of USB flash drives.
In the case of long-term cryptocurrency investment, a cold wallet may be more favorable. A hot wallet may be a more practical choice for people who wish to purchase and sell cryptocurrency frequently, or for those who aren’t completely sold on cryptocurrency.
A cryptocurrency wallet that is always online and connected to the blockchain is referred to as a “hot wallet.” When you use a hot wallet, it is easy to check how many tokens you have available for use, as well as to send and receive cryptocurrency.
As long as your computer or mobile device is connected to the internet and the blockchain network, you can use a hot wallet to store your cryptocurrencies securely. Users can access and save their cryptocurrencies through the usage of the web-based interface provided by your hot wallet.
How to Create a Crypto Wallet
Since you can just purchase cold wallets and use them similarly to USB sticks, this part of the guide will cover creating hot wallets as well as our recommendation for hot wallets that you should use.
Since hot wallets are software that store your cryptocurrency online, creating them varies depending on the platform. The steps for creating a crypto hot wallet can be generalized to:
- Pick a platform
- Create an account
- Manage your profile
MetaMask is a browser plugin that works in the same way as other plugins and can be installed in the same way. Consumers receive access to Ether and other ERC-20 tokens after installing it, allowing them to send funds to any Ethereum address they specify.
How to Create a MetaMask Wallet
- Install the MetaMask extension on your given browser. The software will guide you in the installation process.
- Click the “Get Started” button.
- Click the “Create Wallet” button.
- You’ll be asked to set a password and various security measures for your new wallet.
- Your account is now created.
Pros of MetaMask
- Browser-stored private keys
- Very popular
- Integrations with Ledger devices
Cons of Metamask
- Ethereum and ERC-20 support but lacks support for other blockchains
- Complicated for newbies
- High ERC-20 fees
As one of the most widely used and trusted non-custodial multi-chain wallets and DeFi gateways, Coin98 has millions of users worldwide. It now supports over 25 blockchain platforms, including BTC and ETH as well as Tron, Binance Smart Chain, Solana, Polkadot, Kusama, and Huobi ECO Chain. Coin98 Wallet is expected to support even more platforms in the future.
How to Create a C98 Wallet
- Install the software on your phone (Android/IOS) or use the extension.
- Register your account using the software.
- On the home screen, click on “Manage” then click on “Add Wallet”. The software will then guide you to the process of adding your wallet.
Pros of C98 Wallet
- Optimized processes
- Easy to use
Cons of C98 Wallet
- Relatively new to the market
Phantom Wallet is a non-custodial wallet that is used on the Solana blockchain. It is accessible as a free browser extension. With the wallet, It is possible to u manage your bitcoin and non-fungible tokens, stake and swap tokens, and access DeFi applications running on the Solana blockchain.
How to Create a Fantom Wallet
- Visit this website and choose the link to download the wallet based on your device.
- After installation, click on “Create New Wallet”
- The software will guide you and just follow the steps to create the wallet.
Pros of Phantom Wallet
- Compatible with Ledger devices
- Built-in token swap feature
- Non-custodial wallet
Cons of Phantom Wallet
- Mobile application is still under development
- New to the market
- Lacks support for Ethereum and Bitcoin
How to Secure Your Wallet
Just as in real life, your crypto wallet must be kept secure at all times. Here are various ways that recommend that you do to keep your wallet secure.
Get a Strong Password
To be safe, it is preferable not to use passwords that are merely a mixture of characters or phrases that may be deciphered by a machine. Each character in your password should be distinct from the character you used to gain access to your account the last time, and a minimum of 16 characters is advised.
The safest bet is to use systems that are expressly built to generate strong passwords. Strong passwords are difficult to remember, which is a good reason to be cautious while memorizing them in the first place.
Backup Your Crypto Wallet
Any online wallet is vulnerable to theft, which is a genuine danger. It makes no difference whether or not your computer is connected to the Internet. For security reasons, encrypting backups that are accessible via the Internet is a wise practice.
By creating regular wallet backups, you can ensure that all recent Cryptocurrency address changes, as well as any new addresses you make, are securely stored. To counter this trend, wallets that just require a single backup will soon be utilized across all applications.
Don’t Put All Your Eggs in One Basket
Digital wallets, like conventional wallets, can be used to hold money. Maintaining a limited amount of coins on your computer, mobile device, or server for daily use is a smart rule of thumb.
Any firm that makes the claim to store your money online should be viewed with caution. Numerous exchanges and online wallets have been hacked in the past, and these services lack the protection and security provided by a bank. So it’s best to be safe by spreading out your coins using different crypto wallets.
Use Multisignature Features
Some wallets contain a multi-signature feature, which means that a transaction can only be spent if it has been approved by several different individuals. Because a single hacked device or server cannot be utilized to steal funds, the user has complete control over their finances.
Hopefully, this guide helped you learn everything you need to know to get started with the crypto market. It might seem intimidating with the length of this article but it’s not complicated, you simply need to take it one step at a time and you’d be able to trade and invest in cryptocurrency once you got the hang of it.
* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.